Main Microsoft Software Architect Visits Israel

By Author: Henry Smith
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Bill Gates' replacement: "We will want to do to our rivals what they did to us"

This fighting statement was directed at Google by Ray Ozzie. At a meeting held yesterday in Israel, he predicted that the software licensing business model would not be changing soon, expressed his excitement at the approaching launch of Windows 7 and Office 2010, and was impressed by the optimism of Israeli entrepreneurs

I could not meet Ray Ozzie, main software architect at Microsoft, without asking him about the company's new search engine Bing, and the attempt to compete once again with Google. "Bing excites me", said Ozzie yesterday on his first visit to Israel. "As for competing with Google, the best thing about being number two is that you can carry out experiments that your rival can't really do. Google is very talented and focused, and it's going to be a struggle. We will want to do to our rivals what they did to us."

The good news for Microsoft is that the very same day the Reuters news agency reported that at the end of the first month since its launch, Bing had succeeded in taking a bite out of Google's market share, ...
... which decreased to 78.5% in June, by comparison with 78.7% before Bing was launched. Following its launch at the beginning of June, by the end of the month Bing had an 8.2% share of the market.

Ozzie took over as Bill Gates' replacement as chief software architect of Microsoft after the Microsoft founder retired from his position a year ago to focus on the activities of the charitable foundation he heads together with his wife. Ozzie has been in Israel since Sunday, participating in events and meeting with customers.

Ozzie is a close friend of Internet investor Yossi Vardi, who encouraged him to come and visit Israel. Among other things, Ozzie will be meeting with members of start-up Gizmox, a company developing user interfaces for Internet applications, chaired by Arie Scope, former CEO of Microsoft Israel. According to Gizmox, the meeting was part of the negotiations taking place between the company and Microsoft with regard to extending the cooperation between them to include the field of Windows Azure. The Microsoft Israel R&D Center is looking into using the Gizmox infrastructure and incorporating it in the cloud computing products it offers for companies and organizations.

What was your impression of the innovation of Israeli companies?

"From what I have seen, I am very impressed by the level of innovation, and also the degree of optimism of the entrepreneurs. These are challenging times for big companies and for venture capital funds who are not seeing exits, and this affects companies in many ways. I enjoyed the GarageGeeks (an event taking place in a warehouse in the Holon industrial area, which is both professional and social in nature, and is attended by prominent figures in high-tech - AH), which gives entrepreneurs a way of operating even when there is no funding.

"There is a dynamic feeling here, just like in Silicon Valley or in the Boston area. It's a bit warmer, but you can feel the healthy dynamic between venture capital funds, entrepreneurs, angels and universities. There are a few factors that make the industry healthy, and what is particularly exciting with regard to entrepreneurs is the passion and the excitement of people who believe that they can succeed. Perhaps they are too young to understand that they can't succeed, but it says something good about the industry."

What will be the role of the CTO in the era of cloud computing, and how can we ensure that he continues to work?

"Each company defines jobs differently. The most important function of the CTO is to understand the industry and what advantages it can give the organization. There are a number of aspects of technology that have to be used, which do not necessarily give the organization advantages over its rivals. The more possibilities the CTO has, the more profits the companies will have. We hope to be able to give CTOs more possibilities at the high level of technology by giving more possibilities for infrastructure. I don't see any threat to this position."

How does the issue of privacy go together with the fact that Azure will operate on Microsoft servers?

"In order to achieve effective advertising, companies precede their use with behavioral and context-dependent data. Microsoft is very sensitive to this issue. Since Windows came out we have had very strong understandings with the customers: they keep the files and memories on their servers, and don't think that anyone is looking at their data. They don't think that Microsoft is looking at these data."

"We have to be cautious"

According to Ozzie, "when we move over to the cloud, we have to be very cautious in the way in which we use the customer's data. We have to reproduce the "agreement" that we had with customers when we move over to the cloud model. Azure, which is more than Windows Live (the series of Microsoft online services such as mail, messenger, files storing and so on - AH), will serve as a place where organizations can store their data. We have spent years in developing the separation between the users' data and the people operating the system."

Where will Microsoft be in five years time? (With regards to Microsoft Israel Labs)

"It is hard to make accurate forecasts in our industry. In the short term, I'm very excited about Windows 7. This is an opportunity for Microsoft. There has never been more innovation. I'm also very excited about Office 2010, which will be coming out in the holiday season. It is an example of Office that is not only on the PC but also on the net.

"There will be a transition to the field of services. We built Azure as a platform for the cloud, and we began to transfer things to it. But we did not expect the economic crisis and what it has done to the demand for applications such as Exchange and SharePoint servers. Organizations want to save money, and this is a significant way of saving.

"A few years ago, I would not have believed that demand in the field of applications would be so high. When I came to the company, some of the groups, Office and Windows, were very focused on the products they were working on. The Tools group, which does Visual Studio and Dot.Net, make progress in terms of Internet services, so that there would be a net-based environment for developers. I saw a lot of readiness and curiosity, and now we are starting to see the fruits of these efforts. Was the entire company focused on efforts in this direction? No. Perhaps a third of the company, MSN messenger and Hotmail, understood the fields of services. After them came the development tools people."

Assuming that Microsoft CEO Steve Ballmer retires next week, what is the first thing that you will do?

"I have to reject the question. It not only assumes that Steve will retire, but also that I am the right person to manage the company. What Steve brings to the business is very important. Steve and Bill (Gates) succeeded in bringing the personal computer into every corner. Today there are a range of devices and there is the cloud, and that is where I am trying to take the company. Steve has a great many business aspirations. He took Microsoft from the field of personal computers into the organizational field."

It seems that, in terms of the business model, Google is better prepared for the cloud computing revolution. Will Microsoft have to make substantial changes to its business model?

"There is no doubt that search is an amazing business model. Some people would say that software is also a good business model. We have a great deal of respect for Google, which has entered the game, and we are very optimistic. We are certain that over time, we will provide an excellent choice for advertisers and customers, and share in the profits. As we understand it, if you provide value you make a profit.

About US: "We have worked with organizations for years, and the models that we use are not going to disappear. You won't see R&D companies like Microsoft, IBM, Oracle and SAP suddenly dropping payment for software and maintenance. What is happening on the Internet is that customers are receiving more and more services for advertisements. There is not just one model that is suitable for everything. Advertising can subsidize a type of software for certain fields, but software licensing still has a very significant role to play."